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  1. Home
  2. CFA Certification
  3. CFA-Level-I Exam
  4. CFA.CFA-Level-I.v2024-01-19.q367 Dumps
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Question 351

David Stoyer is valuing a 400,000 square feet building. What is the value of his property using the sales/square ft technique assuming that the table below shows all recent sales of comparable properties in his proximate area?

Correct Answer: B
Be careful of traps! This relatively straightforward question has several misleading answers.
The correct answer requires a multiplication between the 400,000 square footage and the average sales/sq ft. In this problem, the average sales per square foot is 50.935. When this average is multiplied by 400,000 square feet, the valuation becomes $20,374,000. The answers of $20,000,000 and
$ 25,000,000 are designed to trap candidates that select based on the same size (400,000) as the question. However, the correct answer should be based on the average, and not a specific property, per se.
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Question 352

A loss on the sale of property, plant, and equipment should be __________ in computing cash flow from operating activities.

Correct Answer: A
A loss on the sale of a long-lived asset has been subtracted in determining net income.
Because a loss on the sale of a long-lived asset does not represent an operating activity, it must be added to net income to determine cash flow from operating activities.
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Question 353

A put option has a strike of $100, its premium is $7, and the stock is at $100. What is the intrinsic value?

Correct Answer: C
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Question 354

Which of the following is a valid reason for including real estate in an investment portfolio?

Correct Answer: A
Real estate returns exhibit low correlations with stock and bond returns. Real estate returns depend on the cash flows from the real estate and changes in its value. However, real estate investments generally have relatively low liquidity. In addition, real estate transactions involve large transaction costs and typically have high levels of property-specific (firm-specific) risks.
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Question 355

Banks are required by law to keep on hand to back up its deposits a minimum reserve of their checking deposits. This reserve is known as:

Correct Answer: B
Excess reserves are actual reserves that exceed the legal requirement.
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